March 16, 2026 • 19 mins
UK Dentists: Collect your verifiable CPD for this episode here >>> https://courses.dentistswhoinvest.com/smart-money-members-club
———————————————————————
Want gold exposure but not sure whether you should buy a bar, a fund, or something more speculative? We dig into the real reason people reach for gold in the first place, and it is not because it has the best long-term return. We contrast gold’s historic performance with equities, then get specific about what gold is actually good for in a UK investment portfolio: diversification, an inflation-aware store of value, and a hedge against the failure of paper promises.
We also unpack the key tension that trips most investors up. If you buy gold to diversify away from the financial system, you need to think hard about custody and counterparty risk. Physical gold in your own possession is the “pure” form, but storage and security become your problem. Use a vaulting provider and you gain convenience, yet you reintroduce trust in a company that could fail. We talk through UK-specific tax angles too, including Capital Gains Tax on disposals and the useful detail that certain Royal Mint gold coins can be CGT-exempt.
From there, we map out four practical ways to get gold exposure: holding physical gold yourself, buying gold and paying for storage, owning gold companies or a gold ETF inside an ISA or SIPP, and spread betting on gold prices (tax-free in the UK but high-risk and not for beginners). Along the way, we flag the questions that matter most: what outcome are you aiming for, what risks are you truly hedging, and how much complexity do you want to manage?
———————————————————————
Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional. Investment figures quoted refer to simulated past performance and that past performance is not a reliable indicator of future results/performance.
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Dr James (01:43):
As ever, you can claim your CPD for this episode
within the official Dentists WhoInvest Smart Money Members
Club.
Smart Money Members Club alsoincludes multiple mini courses
and webinar series on financefor dentists, including how to
become as tax-efficient aspossible, as well as
understanding investing.
All of this content comes asverifiable CPD, and you can
download your certificates thereand then on completion of each
(02:05):
lesson.
In addition to this, we alsoinclude a whopping 10% discount
on your dental indemnity and a5% discount on lab bills for
dental principals, amongst otherperks and discounts for
members.
Please use the link in thedescription to claim your
verifiable CPD for this episodethat I get asked all the time,
(02:28):
and that question is how can Igain some exposure to the gold
markets?
How can I diversify out of mycurrent holdings and into gold?
Well, actually, interestingly,there's four fundamental ways
you can do this.
But first of all, why would wediversify into gold?
Well, actually, the reason whymost people invest their money
is to grow their capital at thegreatest rate in a proven way.
(02:48):
Now, here's the thing that thatis a very operative thing to
understand.
We need to understand everycomponent of that sentence.
We have to grow our capital,obviously, that's a given.
We want to outpace inflation.
We have to grow it at thegreatest rate because we want
the greatest rate ofappreciation.
We want to show that it growsconsistently and that the rate
that it grows at outpacesinflation by the greatest amount
(03:11):
possible.
But here's the thing that wouldmean that we just potentially
buy wacky things that grow atincredible rates, like 30, 40,
50% a year, all of this stuffconsistently.
Here's the thing (03:21):
the next part of that definition is that it
has to be consistent and investin assets which have done this
over huge amounts of time in aproven way.
Therefore, we have to know thathistorical data would suggest
that they're going to continueto grow, right?
And as long as somethingsatisfies all those things, then
it is potentially a goodlong-term investment.
(03:42):
Now, for most people, what theydo is they invest in paper
assets, they invest in the stockmarket.
What are paper assets?
Paper assets are assets thatare traditionally recorded on
paper.
Obviously, if you hold aportion of a company that is not
tangible, that is traditionallyrecorded on a piece of paper,
alone nowadays it's digital andit's exchanged amongst other
(04:02):
parties, it's exchanged amongstother individuals for a price.
Traditionally, that's recordedon paper, therefore, it is a
paper asset.
It is not tangible, it's onlyworth as much as someone else
will pay for you because of howmuch they believe the company to
be worth, and also because ofhow much they expect the
dividend on that particularstock to yield, in the example
(04:22):
of stocks or in the example ofbonds, the coupon, the coupon
rate.
But of course, all of these, asI say, are recorded on paper.
They're only as good as thepromise, they're only as good as
the promise from that companyto fulfill their obligations, or
the promise from the entitythat has created the bond.
So therefore, should thosecompanies or entities fail, then
(04:43):
those paper assets are notworth anything.
Whereas something like gold,which is tangible, will always
be worth something because goldis the original form of money.
It has always had value sinceancient times.
And the reason for that ispretty much fundamentally
because it looks beautiful.
That's pretty much why it's gotan amazing luster and it does
not tarnish.
That is why, once upon a time,there was an agreement amongst
(05:07):
society, not anything formal.
We just accepted, or there wasthere was a pervading opinion
that gold was worth somethingbecause it looked beautiful.
There was consensus amongstothers that it did, not for any
other reason other than itlooked good.
The value of gold versus itsactual practical usage is
vastly, vastly, vastlymismatched.
(05:29):
The value of any othermaterial, any other metal, is
pretty much determined by itspracticality and its usage.
In gold, it's obviously veryvaluable, however, it is not
actually utilized in that manythings, at least relative to its
value, of course, because whatthat means is that basically
because we all think it looksgood, we deem it to be valuable,
(05:50):
therefore the price is drivenup.
And this is literally why goldis worth more than any other
metal, because it looks good.
And there is consensus amongsociety that we all think it
looks beautiful, and obviouslythere's like a runaway effect
there that as soon as a lot ofpeople think it looks beautiful,
other people jump on thebandwagon too.
And that's actually a hugething that drives the price of
gold.
But having said that, actually,traditionally, the historic
(06:13):
rate of appreciation of gold isabout 6%.
6% since the 1900s, whereas thestock market is about 10%.
So, really, if we're going toinvest in something that
consistently appreciates at thegreatest rate in a proven
fashion with lots of historicaldata, then really the stock
market is traditionally highthat's done, which is a paper
asset.
So, why do people invest ingold if it doesn't appreciate at
(06:35):
the same rate as the stockmarket?
Well, the reason why they dothat is because they want to
diversify away from globalcapitalism.
Because if the world's economyfails, if the world's government
fails, then all our paperassets aren't worth anything
because all those promises arebroken.
Those promises can't befulfilled.
But as long as there's humanbeings, there'll probably be
consensus that gold is worthsomething.
And that is why people buygold.
(06:56):
That is why people hedgeagainst the failure of
capitalism by purchasing somegold so that they have skin in
the game should that situationarise.
That's literally the reason whypeople do it.
They're called gold bugs, isthe technical terminology.
But here's the thing (07:08):
we don't have to believe in impending
Armageddon to have someinvolvement in the gold market.
We might just say, actually,I'm going to diversify.
Actually, I'm going to have alittle bit of this and a little
bit of that.
I'm going to have skin in bothgames.
So, what that means is that I'mcovered either way.
And that's the main rationalethat people do that.
So, on that note, onwards, ontothe four ways that you can gain
(07:30):
a stake in the gold assetcategory.
How you can diversify out ofthe global stock market and
begin to have a portfolio thathas also got gold as a
constituent.
But you must understand thefour ways that you can own some
gold in order to do that.
So, first and foremost, let'stalk about physically owning
(07:52):
some gold.
What does that entail?
It entails purchasingquantities of gold from an
online broker or an offlinebroker.
Others fine.
You get the gold in physicallyin your hand, you take it and
you do what you like with it.
Now, obviously that brings intoconsideration issues with
custody, given that we now haveto find somewhere to store gold.
Do we store it in our house?
Do we store it under our bed?
(08:13):
Do we bet do we bury it in thegarden?
Do we put it in a pillowcase?
Do we find some other place orlocation to store it inside our
house?
Well, we can.
However, should someone catchwind of the fact that we have
gold in our house, then reallythe buck ends with us.
When, if they can come to thehouse and be able to take the
gold.
There's no other way that thatgold can be retained.
(08:35):
Because in accepting the gold,in purchasing it, and having it
physically in our hand, we alsoaccept responsibility for it.
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of this podcast.
And so, therefore, this is thething that puts people off
(10:38):
purchasing gold in this form.
However, should there ever bethis catastrophic scenario or
Armageddon-like situation wherethe where world's the world
society collapses, becauseremember, if paper assets are
not worth anything, it'sprobably meant that the world's
economy is collapsed at thatpoint, in which case, then
society has probably collapsedas well, because that's the
(10:58):
thing that underpins society.
So you've got your gold andyou're storing it, and you want
to be able to say that you'retruly diversified away from the
goals, the world's economy,truly diversified from the
world's economy, then you mustphysically own your gold,
because then you're staying trueto the time-honored reasons or
rationale as to one mightpurchase it.
If we truly are a gold bug andwe truly believe in that
(11:20):
philosophy, we must accept thedownside of the custody issues
as well.
So there's no real perfectsituation, there's no real
perfect scenario here, right?
We own the gold and thereforewe have to store it somewhere,
therefore we have to retain it,right?
And the second that we go andstore it somewhere else and give
it to another party, we'reactually letting go of some of
that custody, which is the wholerationale between the whole
(11:42):
rationale of why which peoplepurchase it in the first place.
So here's the thing.
We've got to understand thisparadox or this duality and
understand that actually there'sthis limitation either way, no
matter what we do.
So here's the thing (11:54):
when you purchase your own gold, when you
sell the gold on, naturally, ifit's over a certain amount in
terms of value, you'll be liablefor capital gains tax.
That'll either be 10 or 20%depending on your income tax
bracket.
However, it is worth knowingthat you can purchase gold coins
from the Royal Mint and whenyou sell them on, actually,
you're not liable for anycapital gains tax, which is a
(12:15):
really, really, really coolthing at the time of recording,
which is the 25th of April 2023.
Worth knowing because thatmeans that you can own gold and
you can sell it on and you canparticipate in being diversified
outside of the globalcapitalist system.
And you have a perk and well,there's a huge perk in there, of
(12:39):
course.
Obviously, we still have tounderstand that custody is
potentially an issue dependingon how we store that gold.
However, when we want to saywe're a true gold bug, when we
truly want to diversify awayfrom the global economy, accept
the fact that gold traditionallydoesn't appreciate at the same
rate as the stock market, thenwe have to store our gold
(13:01):
physically.
We have to own our goldphysically and have it in our
hand, in my opinion.
What is the second way we canpurchase some gold?
Second way is to buy somephysical gold in whatever
quantity we like and havesomeone else up store it on our
behalf.
Now, there's many brokersonline that do this.
Actually, they often give youthe option of being able to
store it in different locationsaround the world.
I've seen Singapore, I've seenNew York, I've seen London.
(13:24):
The reason why they give you avariety of governments to choose
from is that it's not beenunheard of entirely in the past
that the government hasrequisitioned gold.
So depending on how stable youthink the government is in that
particular locale, you willnaturally have a proclivity
towards storing your gold inthat area if you believe the
government to be strong, if youbelieve the government to be not
(13:46):
likely to default on its debtsand repossess everybody's gold.
This has literally happenedbefore.
Not very common, not gonna sayit's gonna happen tomorrow, but
it has happened.
There's been a historicalprecedent there, which is crazy.
you can purchase gold in this way, you
can have someone else store itfor you, they will charge you a
holding fee.
Normally, it's gonna vary basedon the provider.
(14:08):
The thing to be wary of is haveyou actually seen that gold
with your own eyes?
How do you know that whoeverhas sold you that gold is being
fully honest that actually forevery unit of gold they have
sold, they actually have thatexact same quantity of gold
stored in a vault somewherebecause nobody checks these
things.
Maybe they have 10 gigrams ofgold in 10 in total, but they've
(14:31):
sold 30 gram 30 kilograms worthof gold coupons or ownership to
other people.
They're banking on the factthat not everybody's gonna
withdraw their gold all at once.
Only some people will.
Some people will just leave itthere forever.
This is the thing.
This happens, okay?
There's no way to prove this,there's no way to independently
verify this.
Okay, so this is somethingwe've got to be aware of.
So actually, if we buy gold inthis way, are we contravening
(14:54):
the true purpose, the true main,the main philosophy of
purchasing gold in the firstplace, which is that we want to
diversify out of globalcapitalism?
Because the thing about it is,if that situation arises where
the economy fails, then guesswhat?
The company that holds our goldis also gonna go brook brook
too.
Where are their debtors gonnago in order for them to be
(15:16):
remunerated, in order for themto be repaid?
Where are their creditors gonnago in order for them to be
remunerated?
They're gonna go to thecompany's assets and sell those.
And guess what?
The really smart people, thereally smart creditors, get
present in terms of how muchthey get remunerated over Joe
Blogs.
They're way down the line.
JoeBlogs is way down the linein terms of stakeholders in the
(15:36):
company.
And they're actually veryclever because when they lend
money to the companies, theymake sure that they have that
present.
They make sure that they havethat priority.
Something to be aware of.
Personally, I probably wouldn'tpurchase gold in this fashion
because actually it's notaligned with the main reason why
people buy it in the firstplace.
In my opinion, the mainphilosophical argument for
(15:56):
purchasing it was to say thatyou're diversified outside of
the global economy and that youare, to a greater or lesser
degree, a gold bug is theterminology.
Third way we can buy gold.
You can buy shares in goldcompanies.
Naturally, as gold goes up inprice, the main asset of the
company, the main product of thecompany also goes up in price.
(16:19):
Therefore, the companies becomemore profitable, therefore they
make more money, therefore theshare price goes up, therefore
the dividends go up.
Okay, and we can see now howwe've got exposure to gold.
However, we also have exposureto the global stock market,
which is exactly the thing thatwe might be trying to avoid by
purchasing the gold.
But you just got to consider toyourself, do you want to do it
in a convenient way or do wewant to actually have custody of
(16:41):
this gold?
Now, the cool thing aboutbuying gold stocks is that we
can buy them in our ISAT or wecan buy them in our SIP,
potentially.
Now, depending on if we'vebought an individual company or
an ETF, we might be subject tothe risks involved of buying an
individual company in that itcan go bust because the global
gold market is probably going tocontinue, but individual
(17:02):
companies within that mightfluctuate in and out of
existence.
So therefore, we have exposureto gold, yes, but we also might
be overly exposed to we might beoverly exposed to individual
risk of one particular company.
Therefore, we need to be waryof this, right?
So this is when a little bit ofan understanding of risk comes
in.
If we're exposed to, if we'repurchasing a gold ETF, is it an
(17:25):
active ETF with huge fees?
Is it a really well-diversifiedactive ETF?
We have to consider all thesethings whenever we're purchasing
gold in this means.
Big pro is that if it's in anISA and if it's in the SIP, then
naturally all the all theappreciation is going to be
tax-free, you know, on the moneythat's already within those tax
(17:46):
wrappers.
However, of course, we're notactually truly diversified in
gold because we don't physicallyhave it in our hand.
And of course, should the worldeconomy collapse, then
naturally these are going tocollapse too.
Not that I'm going to saythat's likely.
All I'm saying is that if thatis your philosophy, and if that
is the reason why you purchasegold, which for me is the main
argument in purchasing it, orfor me is the main reason that
someone might do it, thenactually, if that is our belief,
(18:10):
then it's actually at odds withpurchasing gold in this way.
Food for thought.
But it is convenient though.
Fourth one, spread betting.
What is spread betting?
It's in essence betting onwhether or not the price of an
asset will go up or down invalue.
When we bet in this way, thenwhat it means is if we bet the
asset will go up in value, thennaturally we'll make money, and
(18:33):
then we'll cut we'll close ourposition and we'll be up.
We can bet on the price of goldgoing up and down.
We can bet on the price of goldcompanies go up and going up
and down.
And what it means is we can getexposure to gold via this
means.
Of course, spread better is notfor the faint of heart.
The cool thing is it's tax-freein the UK.
It's actually illegal inAmerica, but it's legal in the
(18:54):
UK.
It's tax-free in the UK becausethe class is gambling.
Winning from gambling istax-free, uh, as you may or may
not know.
Um, however, of course, it'snot for the faint of heart.
There's got to be a lot oftechnical knowledge there in
order to use these platforms.
And also, in likelihood, itwill require active management
of your position because you'regoing to have to monitor whether
or not it goes up or down.
(19:14):
So, certainly, it's notsomething that we want to do, at
least at the very beginning, toget some exposure to gold, but
it may wish you may wish for itto be something that you
consider with time wheneveryou're experienced at investing.
The cool thing is that you nowknow it exists, so therefore you
know that's out there.
So, should you believe that youwant to purchase some gold,
should you believe that you wantto get actively involved in
owning gold as an asset, theseare your four ways to do it.
(19:37):
It's just about picking the onethat's most aligned with the
outcome that you desire.
And so
As ever, you can claim your CPD for this episode
within the official Dentists WhoInvest Smart Money Members
Club.
Smart Money Members Club alsoincludes multiple mini courses
and webinar series on financefor dentists, including how to
become as tax-efficient aspossible, as well as
understanding investing.
All of this content comes asverifiable CPD, and you can
download your certificates thereand then on completion of each
(02:05):
lesson.
In addition to this, we alsoinclude a whopping 10% discount
on your dental indemnity and a5% discount on lab bills for
dental principals, amongst otherperks and discounts for
members.
Please use the link in thedescription to claim your
verifiable CPD for this episodethat I get asked all the time,
(02:28):
and that question is how can Igain some exposure to the gold
markets?
How can I diversify out of mycurrent holdings and into gold?
Well, actually, interestingly,there's four fundamental ways
you can do this.
But first of all, why would wediversify into gold?
Well, actually, the reason whymost people invest their money
is to grow their capital at thegreatest rate in a proven way.
(02:48):
Now, here's the thing that thatis a very operative thing to
understand.
We need to understand everycomponent of that sentence.
We have to grow our capital,obviously, that's a given.
We want to outpace inflation.
We have to grow it at thegreatest rate because we want
the greatest rate ofappreciation.
We want to show that it growsconsistently and that the rate
that it grows at outpacesinflation by the greatest amount
(03:11):
possible.
But here's the thing that wouldmean that we just potentially
buy wacky things that grow atincredible rates, like 30, 40,
50% a year, all of this stuffconsistently.
Here's the thing (03:21):
the next part of that definition is that it
has to be consistent and investin assets which have done this
over huge amounts of time in aproven way.
Therefore, we have to know thathistorical data would suggest
that they're going to continueto grow, right?
And as long as somethingsatisfies all those things, then
it is potentially a goodlong-term investment.
(03:42):
Now, for most people, what theydo is they invest in paper
assets, they invest in the stockmarket.
What are paper assets?
Paper assets are assets thatare traditionally recorded on
paper.
Obviously, if you hold aportion of a company that is not
tangible, that is traditionallyrecorded on a piece of paper,
alone nowadays it's digital andit's exchanged amongst other
(04:02):
parties, it's exchanged amongstother individuals for a price.
Traditionally, that's recordedon paper, therefore, it is a
paper asset.
It is not tangible, it's onlyworth as much as someone else
will pay for you because of howmuch they believe the company to
be worth, and also because ofhow much they expect the
dividend on that particularstock to yield, in the example
(04:22):
of stocks or in the example ofbonds, the coupon, the coupon
rate.
But of course, all of these, asI say, are recorded on paper.
They're only as good as thepromise, they're only as good as
the promise from that companyto fulfill their obligations, or
the promise from the entitythat has created the bond.
So therefore, should thosecompanies or entities fail, then
(04:43):
those paper assets are notworth anything.
Whereas something like gold,which is tangible, will always
be worth something because goldis the original form of money.
It has always had value sinceancient times.
And the reason for that ispretty much fundamentally
because it looks beautiful.
That's pretty much why it's gotan amazing luster and it does
not tarnish.
That is why, once upon a time,there was an agreement amongst
(05:07):
society, not anything formal.
We just accepted, or there wasthere was a pervading opinion
that gold was worth somethingbecause it looked beautiful.
There was consensus amongstothers that it did, not for any
other reason other than itlooked good.
The value of gold versus itsactual practical usage is
vastly, vastly, vastlymismatched.
(05:29):
The value of any othermaterial, any other metal, is
pretty much determined by itspracticality and its usage.
In gold, it's obviously veryvaluable, however, it is not
actually utilized in that manythings, at least relative to its
value, of course, because whatthat means is that basically
because we all think it looksgood, we deem it to be valuable,
(05:50):
therefore the price is drivenup.
And this is literally why goldis worth more than any other
metal, because it looks good.
And there is consensus amongsociety that we all think it
looks beautiful, and obviouslythere's like a runaway effect
there that as soon as a lot ofpeople think it looks beautiful,
other people jump on thebandwagon too.
And that's actually a hugething that drives the price of
gold.
But having said that, actually,traditionally, the historic
(06:13):
rate of appreciation of gold isabout 6%.
6% since the 1900s, whereas thestock market is about 10%.
So, really, if we're going toinvest in something that
consistently appreciates at thegreatest rate in a proven
fashion with lots of historicaldata, then really the stock
market is traditionally highthat's done, which is a paper
asset.
So, why do people invest ingold if it doesn't appreciate at
(06:35):
the same rate as the stockmarket?
Well, the reason why they dothat is because they want to
diversify away from globalcapitalism.
Because if the world's economyfails, if the world's government
fails, then all our paperassets aren't worth anything
because all those promises arebroken.
Those promises can't befulfilled.
But as long as there's humanbeings, there'll probably be
consensus that gold is worthsomething.
And that is why people buygold.
(06:56):
That is why people hedgeagainst the failure of
capitalism by purchasing somegold so that they have skin in
the game should that situationarise.
That's literally the reason whypeople do it.
They're called gold bugs, isthe technical terminology.
But here's the thing (07:08):
we don't have to believe in impending
Armageddon to have someinvolvement in the gold market.
We might just say, actually,I'm going to diversify.
Actually, I'm going to have alittle bit of this and a little
bit of that.
I'm going to have skin in bothgames.
So, what that means is that I'mcovered either way.
And that's the main rationalethat people do that.
So, on that note, onwards, ontothe four ways that you can gain
(07:30):
a stake in the gold assetcategory.
How you can diversify out ofthe global stock market and
begin to have a portfolio thathas also got gold as a
constituent.
But you must understand thefour ways that you can own some
gold in order to do that.
So, first and foremost, let'stalk about physically owning
(07:52):
some gold.
What does that entail?
It entails purchasingquantities of gold from an
online broker or an offlinebroker.
Others fine.
You get the gold in physicallyin your hand, you take it and
you do what you like with it.
Now, obviously that brings intoconsideration issues with
custody, given that we now haveto find somewhere to store gold.
Do we store it in our house?
Do we store it under our bed?
(08:13):
Do we bet do we bury it in thegarden?
Do we put it in a pillowcase?
Do we find some other place orlocation to store it inside our
house?
Well, we can.
However, should someone catchwind of the fact that we have
gold in our house, then reallythe buck ends with us.
When, if they can come to thehouse and be able to take the
gold.
There's no other way that thatgold can be retained.
(08:35):
Because in accepting the gold,in purchasing it, and having it
physically in our hand, we alsoaccept responsibility for it.
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And so, therefore, this is thething that puts people off
(10:38):
purchasing gold in this form.
However, should there ever bethis catastrophic scenario or
Armageddon-like situation wherethe where world's the world
society collapses, becauseremember, if paper assets are
not worth anything, it'sprobably meant that the world's
economy is collapsed at thatpoint, in which case, then
society has probably collapsedas well, because that's the
(10:58):
thing that underpins society.
So you've got your gold andyou're storing it, and you want
to be able to say that you'retruly diversified away from the
goals, the world's economy,truly diversified from the
world's economy, then you mustphysically own your gold,
because then you're staying trueto the time-honored reasons or
rationale as to one mightpurchase it.
If we truly are a gold bug andwe truly believe in that
(11:20):
philosophy, we must accept thedownside of the custody issues
as well.
So there's no real perfectsituation, there's no real
perfect scenario here, right?
We own the gold and thereforewe have to store it somewhere,
therefore we have to retain it,right?
And the second that we go andstore it somewhere else and give
it to another party, we'reactually letting go of some of
that custody, which is the wholerationale between the whole
(11:42):
rationale of why which peoplepurchase it in the first place.
So here's the thing.
We've got to understand thisparadox or this duality and
understand that actually there'sthis limitation either way, no
matter what we do.
So here's the thing (11:54):
when you purchase your own gold, when you
sell the gold on, naturally, ifit's over a certain amount in
terms of value, you'll be liablefor capital gains tax.
That'll either be 10 or 20%depending on your income tax
bracket.
However, it is worth knowingthat you can purchase gold coins
from the Royal Mint and whenyou sell them on, actually,
you're not liable for anycapital gains tax, which is a
(12:15):
really, really, really coolthing at the time of recording,
which is the 25th of April 2023.
Worth knowing because thatmeans that you can own gold and
you can sell it on and you canparticipate in being diversified
outside of the globalcapitalist system.
And you have a perk and well,there's a huge perk in there, of
(12:39):
course.
Obviously, we still have tounderstand that custody is
potentially an issue dependingon how we store that gold.
However, when we want to saywe're a true gold bug, when we
truly want to diversify awayfrom the global economy, accept
the fact that gold traditionallydoesn't appreciate at the same
rate as the stock market, thenwe have to store our gold
(13:01):
physically.
We have to own our goldphysically and have it in our
hand, in my opinion.
What is the second way we canpurchase some gold?
Second way is to buy somephysical gold in whatever
quantity we like and havesomeone else up store it on our
behalf.
Now, there's many brokersonline that do this.
Actually, they often give youthe option of being able to
store it in different locationsaround the world.
I've seen Singapore, I've seenNew York, I've seen London.
(13:24):
The reason why they give you avariety of governments to choose
from is that it's not beenunheard of entirely in the past
that the government hasrequisitioned gold.
So depending on how stable youthink the government is in that
particular locale, you willnaturally have a proclivity
towards storing your gold inthat area if you believe the
government to be strong, if youbelieve the government to be not
(13:46):
likely to default on its debtsand repossess everybody's gold.
This has literally happenedbefore.
Not very common, not gonna sayit's gonna happen tomorrow, but
it has happened.
There's been a historicalprecedent there, which is crazy.
you can purchase gold in this way, you
can have someone else store itfor you, they will charge you a
holding fee.
Normally, it's gonna vary basedon the provider.
(14:08):
The thing to be wary of is haveyou actually seen that gold
with your own eyes?
How do you know that whoeverhas sold you that gold is being
fully honest that actually forevery unit of gold they have
sold, they actually have thatexact same quantity of gold
stored in a vault somewherebecause nobody checks these
things.
Maybe they have 10 gigrams ofgold in 10 in total, but they've
(14:31):
sold 30 gram 30 kilograms worthof gold coupons or ownership to
other people.
They're banking on the factthat not everybody's gonna
withdraw their gold all at once.
Only some people will.
Some people will just leave itthere forever.
This is the thing.
This happens, okay?
There's no way to prove this,there's no way to independently
verify this.
Okay, so this is somethingwe've got to be aware of.
So actually, if we buy gold inthis way, are we contravening
(14:54):
the true purpose, the true main,the main philosophy of
purchasing gold in the firstplace, which is that we want to
diversify out of globalcapitalism?
Because the thing about it is,if that situation arises where
the economy fails, then guesswhat?
The company that holds our goldis also gonna go brook brook
too.
Where are their debtors gonnago in order for them to be
(15:16):
remunerated, in order for themto be repaid?
Where are their creditors gonnago in order for them to be
remunerated?
They're gonna go to thecompany's assets and sell those.
And guess what?
The really smart people, thereally smart creditors, get
present in terms of how muchthey get remunerated over Joe
Blogs.
They're way down the line.
JoeBlogs is way down the linein terms of stakeholders in the
(15:36):
company.
And they're actually veryclever because when they lend
money to the companies, theymake sure that they have that
present.
They make sure that they havethat priority.
Something to be aware of.
Personally, I probably wouldn'tpurchase gold in this fashion
because actually it's notaligned with the main reason why
people buy it in the firstplace.
In my opinion, the mainphilosophical argument for
(15:56):
purchasing it was to say thatyou're diversified outside of
the global economy and that youare, to a greater or lesser
degree, a gold bug is theterminology.
Third way we can buy gold.
You can buy shares in goldcompanies.
Naturally, as gold goes up inprice, the main asset of the
company, the main product of thecompany also goes up in price.
(16:19):
Therefore, the companies becomemore profitable, therefore they
make more money, therefore theshare price goes up, therefore
the dividends go up.
Okay, and we can see now howwe've got exposure to gold.
However, we also have exposureto the global stock market,
which is exactly the thing thatwe might be trying to avoid by
purchasing the gold.
But you just got to consider toyourself, do you want to do it
in a convenient way or do wewant to actually have custody of
(16:41):
this gold?
Now, the cool thing aboutbuying gold stocks is that we
can buy them in our ISAT or wecan buy them in our SIP,
potentially.
Now, depending on if we'vebought an individual company or
an ETF, we might be subject tothe risks involved of buying an
individual company in that itcan go bust because the global
gold market is probably going tocontinue, but individual
(17:02):
companies within that mightfluctuate in and out of
existence.
So therefore, we have exposureto gold, yes, but we also might
be overly exposed to we might beoverly exposed to individual
risk of one particular company.
Therefore, we need to be waryof this, right?
So this is when a little bit ofan understanding of risk comes
in.
If we're exposed to, if we'repurchasing a gold ETF, is it an
(17:25):
active ETF with huge fees?
Is it a really well-diversifiedactive ETF?
We have to consider all thesethings whenever we're purchasing
gold in this means.
Big pro is that if it's in anISA and if it's in the SIP, then
naturally all the all theappreciation is going to be
tax-free, you know, on the moneythat's already within those tax
(17:46):
wrappers.
However, of course, we're notactually truly diversified in
gold because we don't physicallyhave it in our hand.
And of course, should the worldeconomy collapse, then
naturally these are going tocollapse too.
Not that I'm going to saythat's likely.
All I'm saying is that if thatis your philosophy, and if that
is the reason why you purchasegold, which for me is the main
argument in purchasing it, orfor me is the main reason that
someone might do it, thenactually, if that is our belief,
(18:10):
then it's actually at odds withpurchasing gold in this way.
Food for thought.
But it is convenient though.
Fourth one, spread betting.
What is spread betting?
It's in essence betting onwhether or not the price of an
asset will go up or down invalue.
When we bet in this way, thenwhat it means is if we bet the
asset will go up in value, thennaturally we'll make money, and
(18:33):
then we'll cut we'll close ourposition and we'll be up.
We can bet on the price of goldgoing up and down.
We can bet on the price of goldcompanies go up and going up
and down.
And what it means is we can getexposure to gold via this
means.
Of course, spread better is notfor the faint of heart.
The cool thing is it's tax-freein the UK.
It's actually illegal inAmerica, but it's legal in the
(18:54):
UK.
It's tax-free in the UK becausethe class is gambling.
Winning from gambling istax-free, uh, as you may or may
not know.
Um, however, of course, it'snot for the faint of heart.
There's got to be a lot oftechnical knowledge there in
order to use these platforms.
And also, in likelihood, itwill require active management
of your position because you'regoing to have to monitor whether
or not it goes up or down.
(19:14):
So, certainly, it's notsomething that we want to do, at
least at the very beginning, toget some exposure to gold, but
it may wish you may wish for itto be something that you
consider with time wheneveryou're experienced at investing.
The cool thing is that you nowknow it exists, so therefore you
know that's out there.
So, should you believe that youwant to purchase some gold,
should you believe that you wantto get actively involved in
owning gold as an asset, theseare your four ways to do it.
(19:37):
It's just about picking the onethat's most aligned with the
outcome that you desire.
And so
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